Middle market bank leaders sometimes assume that the most transformative technologies are out of their reach. But the path to future competitiveness in banking runs through technology. No matter the size of the bank.
Middle market banks are in an enviable position when it comes to getting the full value of emerging technologies. They have a lot of flexibility around the decisions they make and the pace they move. It’s a competitive edge that many middle market banks don’t fully realize they have. And it’s why I’m sharing my take on what Accenture’s Banking Technology Vision 2021 means for these banks. Here are five tech trends that we think are most likely to impact banks in the coming years.
1. Stack Strategically: Architecting a better future
It used to be that banks competed primarily on customer experience, pricing and convenience. They will increasingly compete on their technology architectures that enable innovative products, faster. In the digital era, a bank’s architecture can make or break its ability to deliver its strategy, create business value and even serve customers. Put simply, future competitiveness will ultimately come down to a competitive technology stack.
Middle market banks can take advantage of modern, packaged software solutions that deliver all the functionality they need right out of the box. I’m seeing a lot of momentum around these many-to-one solutions in the middle market in lending and payments now. I expect to see the same in core banking over the next few years.
2. Mirrored World: The power of massive, intelligent digital datasets
Thanks to investments in data and artificial intelligence, the physical world can be represented in digital space. In this “mirrored world,” banks can create data-driven models of everything from operational processes to customer journeys. It’s a risk-free, data-rich digital environment that gives banks the freedom to test out new ways of working and serving customers without massive risk and investments.
While technologies like cloud power mirrored worlds, it’s the combination of data and intelligence that makes them so valuable. This is what I remind my middle market bank clients. The critical benefit of moving data to the cloud—apart from the cost savings—is the processing power. Imagine using a living model to anticipate customer needs. It’s not only possible, but middle market banks can also get there fast.
3. I, Technologist: The democratization of technology
Remember when technology development was hidden away in the IT department? While IT will always handle major implementations, the advent of tools like natural language processing and low-code processing has democratized technology. It’s creating space for business and technology to work together in a one-team concept in the middle market, which opens the door to a lot of exciting possibilities.
With the us vs. them silos gone, combined business and technology teams can get new (and more impactful) features and functionality into customers’ hands faster. With cross-functional teams, middle market banks will be able to shift to a true product mindset in how they develop solutions for customers. It’s about bringing value to customers grounded in what they need and how they live.
4. Anywhere, Everywhere: Bring your own environment
Out of all these technology trends, this one is most directly rooted in the experiences of the pandemic year when remote working took off out of necessity. Regardless of what ultimately happens with the pandemic, there’s no putting this genie back in the bottle.
As middle market banks explore how to turn remote working from an immediate accommodation to a lasting advantage, questions abound. What will more remote work mean for talent management, retention and recruitment? How do banks preserve their unique cultures? Are banks hardened against new security threats? I think that middle market banks’ innate flexibility—combined with how well they know their people—will give them a leg up on working through these tough questions.
5. From Me to We: A multiparty system’s path through chaos
The multiplier effect of partnerships is not new. What is new is how banks are leaning into all kinds of partners—even unconventional players from completely outside the financial services industry—to become more resilient and pursue very different ways of approaching customers.
The trick for middle market banks is to find the best way to use technology partnerships. There’s tremendous opportunity for them to take a hard look at what differentiates them. From there, they can turn to partners to handle the non-differentiating, “standard” capabilities. It’s how they can strategically direct resources to what sets them apart from the competition.
From tracking trends to acting on them
I’m already seeing these trends in play, and I encourage every middle market leader to seize this moment to think differently about your technology agenda. After all, the pandemic not only taught us all about technology’s power; it also revealed technology gaps that need to be addressed.